The Hilary Clarke interview: Malcolm Miller - A pace setter in the drive to digital TV

Malcolm Miller has a mission: to make his company the biggest producer of set-top boxes in the world

WHEN the button is pressed for the launch of BSkyB's digital television services on Thursday, the sighs of relief will be heard far beyond the executive suites at the company's headquarters in Isleworth. One of the most resounding echoes will come from the Yorkshire office of Malcolm Miller, chief executive of Pace Micro Technology. Pace is Europe's largest supplier of the digital decoders, or set-top boxes, the electronic machine that will enable subscribers to tune in to the new 140-channel service. The company, whose headquarters in Saltaire are housed in an old wool mill, is to produce 250,000 to 300,000 set-top boxes in the first six months of the BSkyB digital launch.

It will be an excellent start to a new era for Pace and for Miller. The old management team was finally buried at the company's annual general meeting last week, when co-founder David Hood, still Pace's biggest single shareholder, moved from being an executive to non-executive director. The move followed a tumultuous period in Pace's history since its sparkling public flotation in June 1996 that was then followed by four profit warnings in a year and a collapse in the company's share price last year.

Heads rolled - not least that of the other co-founder Barry Rubery, who resigned from the board "citing irreconcilable differences of management style". The search was on for a replacement, and the company eventually hired Miller.

Today, in a chat over lunch at London's trendy Pont de la Tour restaurant, the 43-year old Miller is philosophical but to the point about the events that led up to his appointment. "A lot of the problems were caused by the digital revolution not happening as fast as many observers had predicted it would. The City and some journalists became frustrated with it and the founders became frustrated with that, too." he says. Pace's share price fell to a low of 44 pence last March a massive drop from the 172p launch price. "Often when a company goes public, whilst the people that founded the company did tremendously well the company sometimes needs a different approach to take it on," said Miller. "The point really about shareholder growth and value is that it has to be built on firm foundations. A lot of companies out there have enormous expectations, and it is questionable if they will be fulfilled. My job is to keep expectations in line with what results will be."

Since March, Pace's stock has been making a slow but steady recovery closing at 62p on Friday. Part of that can be attributed to a vote of confidence from the City in the steady hand of Miller, whose unshaven image defies his acute business acumen.

Miller, who hails from Hendon, north London, began his career with Unilever, who snapped him up after a successful industrial placement with the consumer goods multinational as a business studies student. He spent a number of years working in marketing for the Bird's Eye brand before jumping ship to join Alan Sugar's Amstrad. "I was there for 16 years, so it must have been pretty good," says Miller, when asked how he enjoyed working for Sugar. "Actually he's a very nice person once he drops his guard." Although Sugar was travelling and not available for comment, a Sugar aide said "he is very fond of Malcolm" despite the fact that Miller is now heading one of the main rivals to Amstrad, which is also planning to launch its own digital set-top box range.

The 1980s was an exciting time to be working for Amstrad, the company responsible for making personal computers affordable for ordinary people. During the last three years of his career with Sugar, Miller was managing director during which time he was instrumental in the acquisition of two companies, Viglen and Dancall. He also oversaw the launch of the company's first low-cost analog satellite receiver. Miller then moved to the Japanese company Sega, maker of video games, where he spent the three years prior to joining Pace. Miller sees no incongruity in the jump from cakes to computers. "It's same thing really. We all want to find out what consumers want then produce it and make money out of it."

Miller's style is definitely laid-back. He refuses the services of a company chauffeur, preferring to drive his BMW "because it is quicker" on his regular trips from his Hertfordshire home, which he shares with his wife and two teenage children, to the Pace headquarters in Yorkshire.

Not surprisingly, he waxes lyrical about the benefits of digital television and the other services that the new technology will enable, such as home shopping and home banking. As well as being the first company to provide set-top boxes for BSkyB's satellite digital services, Pace is also the main supplier of receivers for ONdigital, BSkyB's rival that is set to broadcast terrestrial digital television services early next year.

Pace also recently won the contract for digital cable receivers from Cable and Wireless. It will develop the service along with Cisco Systems of California. It is the company's first cable contract for some time, its first in this country. The initial contract with CWC is for 100,000 boxes with shipments planned for Spring next year.

Miller sees no problem in supplying for all three companies, which are expected to compete fiercely with each other for viewers. He compares the emerging digital television market to that of mobile phones. "Just like Vodaphone doesn't say to Ericsson that it can't produce its phone for Mercury or Orange, for us there is no difference," he says. While Miller thinks too much has been made by the media of the so-called "digital wars" and bitter rivalry between the different broadcasters offering the service, he admits Pace will be one of the main beneficiaries of the hot competitive environment. It will, he says in a distinct London accent be "wonderful for us, absolutely marvellous. The competition between the different companies means the consumer will receive more information, there will be more advertising, retailers will be pleased to stock the products and offer consumers choice, and it will stimulate the market and that's what we need."

In addition to its current contracts, Pace is also talking to the Korean consumer electronics company LG and Japan's Toshiba to build televisions with the set-top boxes inside the main machine.

Miller is a passionate supporter of British industry and of engineers, the all-important grey matter of Pace's 800-strong staff roll. He recently wrote to the Department of Trade and Industry asking the Government to take action to increase the appeal of a career in engineering for under- graduates. "We need a push by the Government to say we need more engineers. For many people in this country, engineering is still seen as a job where you have to roll up your sleeves and get your hands dirty with heavy machinery. It's nothing like that."

While the job of the engineers at Pace is more about fiddling with software programs than hoisting up heavy machinery, Miller himself is not afraid to take tough decisions if he has to. "He can be quite ruthless when necessary," said one former Amstrad employee. One of the first things Miller did when taking over the top slot at Pace was to issue around 200 redundancy notices to "mainly administrative and overseas operations which we didn't need any more".

Whether Miller will manage to fulfil his mission statement to make Pace the biggest producer of set-top boxes in the world remains to be seen. Crucial will be the extent to which the public warms to digital television. BSkyB is predicting 200,000 viewers by the end of the year. "What we have to see is profitability arising from when the services start rolling out," said Miller. Shareholders will most certainly agree.

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